Ag input lien takes effect July 1
By Janet Kubat Willette
jkubat@agrinews.com
Date Modified: 06/17/2010 9:13 AM
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The perfect financial storm of low hog prices and high corn prices stressed many hog producers over the past two years, with farmer lender mediation requests up 55 percent from October 2008 to October 2009.
It's also stressed feed mills. The average feed mill has written off $90,000 for feed sold on credit over the last two years, said Bob Zelenka, executive director of the Minnesota Grain and Feed Association.
Feed suppliers had few options when their customers entered farmer-lender mediation: Demand cash in advance, cut off the livestock feed supply or place a lien with little chance of recouping the cost of the feed delivered, Zelenka said.
Feed mills can ill afford these continued losses, which spurred the MGFA to seek legislative help.
The Minnesota Grain and Feed Association and the Minnesota Pork Producers Association worked together to lobby for legislation that protects feed mills and livestock during the 2010 legislative session.
Their efforts yielded the creation of a temporary livestock production input lien in the agriculture omnibus bill. The bill gives input suppliers the first position on feed provided during the 45 days following a mediation request, Zelenka said.
It's an animal care issue, said Dave Preisler, MPPA executive director. The association wants to be sure that animals are provided feed while farmers work through financial issues and figure out the next steps for their farm.
Not only is it an animal care issue, but also a collateral issue. Bankers benefit from the animals being fed as the livestock is typically held as collateral, said Rep. Al Juhnke, DFL-Willmar, chairman of the House Agriculture, Rural Economies and Veterans Affairs Finance division.
Legislators wanted to be sure the feed supplier was paid during those 45 days. After the mediation, something should be figured out, Juhnke said.
The lien puts a mechanism in place to protect the feed supplier, while at the same time making sure the livestock isn't being neglected, said Rep. Doug Magnus, R-Slayton, lead Republican on the House Agriculture, Rural Economies and Veterans Affairs Finance committee.
Zelenka said members of Minnesota Feed and Grain would have liked a longer time period, but realistically that would be difficult, if not impossible, to get through.
The temporary livestock production input lien gives feed suppliers the opportunity to protect their risk and to receive payment for feed delivered during those 45 days, he said.
The lien language takes effect July 1, 2010.